As someone who was looking at housing for a while but has recently decided that owning a home in New Zealand just may not be in my foreseeable future, two thoughts took hold:
In New Zealand, housing accounts for an enormous part of our economy, so it is hardly surprising that when economic chatter increases, housing is at the root of it. This reminded of an essay I read on this topic, The Housing Theory of Everything by Sam Bowman, John Myers and Ben Southwood at Work in Progress (HTOE).
It is probably one of the most relevant essays I have ever read.
In their essay, Sam Bowman, John Myers and Ben Southwood make the case that housing shortages around the western world not only prevent home ownership (a pretty major issue by itself) but drive inequality, poor environmental outcomes, low productivity, fertility rates and obesity amongst almost any other problematic issue you can think of.
The housing theory of everything - Works in Progress
If housing does lie at the root of social ills, that’s a big issue in New Zealand. Housing affordability has been becoming more out of reach rapidly.
So the essay seems especially relevant to new Zealand today. In it, the authors ask readers to list problema in the Western world and posit that housing shortages magnify the harms of these problems and in many cases are the cause of them.
In New Zealand we can point to the poverty we see as people line up for state housing, the tension and violence that is regularly reported, or the stress and poor mental health outcomes we see - it starts to feel like the argument is basically right - these issues are either driven by or magnified by the increasing costs of housing.
The problem in New Zealand matches the problem identified in the essay. As populations have increased, we have not been increasing the houses for people to live in. Then, couple that to an environment of cheap credit and, I’d argue more perniciously in the case of New Zealand, intentional prohibitions on building housing, the result is more people living in fewer houses, more expensive prices for worse homes, and at the harshest end - people not living in houses at all.
This is an anomaly in western economies, the essay points to the prices of household items decreasing compared to incomes fairly rapidly over the last half century.
I couldn’t find specific data for this in New Zealand easily, but the data certainly exists in the US showing prices compared to hours needed to work to pay dropping rapidly for things like washing machines, cars and televisions.
It has a truth feel in New Zealand just by recollecting the state of New Zealand pre-opening the economy in the 1980s. There’s some information that also matches the specific examples of cars used in the essay. We certainly feel to have more access to “stuff” today than we did even back 15 years ago. Yet, houses have become much more unobtainable.
Beyond the obvious issue of high housing costs the essay outlines some major issues that ring true in Aotearoa.